ACS to challenge OFT over market

The Association of Convenience Stores (ACS) is to mount a legal challenge to the Office of Fair Trading’s (OFT) decision to dismiss its request for a full investigation of the grocery market.

The association, with the backing of its members, has submitted a formal appeal to the Competition Appeals Tribunal (CAT) in a bid to force the Competition Commission to launch a full review of the market.

The legal action follows evidence presented by the ACS to the OFT earlier this year, which aimed to show how the multiple grocers’ entry into the c-store sector was distorting the market, undermining competition and raising the barriers to entry for smaller players.

However, the OFT ruled out a market review in August, stating that the grocery market is competitive, is working in the interests of consumers, and that are were no grounds to refer the market to the Competition Commission or to launch a new market study. A formal hearing is expected to take place in around nine months time, and the ACS will have to employ a legal team including a QC to prepare the appeal - at considerable expense to the association.

However, members at a recent board meeting gave the executive full backing to proceed. ACS chief executive David Rae confirmed that the decision to mount a legal challenge had not been taken lightly but believed the OFT must now be called to account for its decision not to set up an enquiry.

He commented: “The OFT failed to properly consider the arguments and evidence presented by our members, and thereby failed in its obligations under the Enterprise Act 2002, which sets out the rules relating to investigations into markets. The OFT’s flawed consideration of this evidence has led to erroneous conclusions on below-cost selling, price flexing and the acceleration of c-store acquisitions by the major multiple retailers. These conclusions will be challenged.”

The ACS’s latest move follows the admission by competition minister Gerry Sutcliffe at a fringe meeting arranged by the ACS at the recent Labour Party Conference in Brighton that “there is clearly something going wrong” in the food retail sector. Fringe meetings were also arranged by the ACS at the Liberal Democrats and Conservative Party conferences, with the ACS highlighting the vital role local stores play in the local community.